Stepan Is On A Global Buying Spree

Chicagoland surfactants maker Stepan Co. is coming out of the recession with global expansion in mind. This month, the company made two overseas acquisitions. Late last week, Stepan purchased Alfa Systems, which just year finished construction of its plant near Wroclaw, Poland. The facility has 25,000 metric tons of aromatic polyester polyol capacity and downstream polyurethane systems output. The polyols are made from recycled polyethylene terephthalate. Earlier this month, Stepan purchased Peter Cremer’s 100,000-metric-ton-per-year methyl ester plant in Singapore. Stepan has said nothing about the financial terms of either of the deals, not even when they’ll be accretive to earnings. Though Stepan executives will likely give some clues the next time they issue earnings in a couple of weeks. Up to this point, Stepan hasn’t been the most global company in the world. Nearly two thirds of its sales come from within the U.S. Less than 15% come from outside the U.S., U.K., and France. The company does, however, have joint ventures in the Philippines and China. But even though it is largely a regional firm, there are few chemical companies that held up during the recession as well as Stepan has. While its sales declined from $1,600 million in 2008 to $1,276 million in 2009, its earnings increased from $37 million to $63 million. The company has also come out of the recession with nearly $100 million in cash on its balance sheets. Also worth mentioning is that Rhodia recently made a Chinese surfactant acquisition. Update: Stepan is also increasing its stake in its JV in the Philippines from 50% to 89%. In the company's statement, CEO F. Quinn Stepan, Jr. talked up synergies with the the plant it is buying in Singapore. BTW, its partner in the JV has the best name ever, United Coconut Chemicals. If there was ever a Marx Brothers movie about a chemical company run by Groucho, with Harpo and Chico in charge of operations, the name of that company would, without question, be United Coconut Chemicals.

Author: Alex Tullo

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